Foreign Exchange Risk

The risk that the return on an investment may be reduced or eliminated because of a change in the exchange rate of two currencies. For example, if an American has a CD in the United Kingdom worth 1 million British pounds and the exchange rate is 2 USD: 1 GBP, then the American effectively has $2 million in the CD. However, if the exchange rate changes significantly to, say, 1 USD: 1 GBP, then the American only has $1 million in the CD, even though he/she still has 1 million pounds. Foreign exchange risk is also called exchange rate risk.

6 July 2012 - A Ramon Espinosa has been hired as quantitative research head at the foreign exchange risk management team of Wells Fargo International Group, the foreign exchange specialist, part of Wells Fargo & Co (NYSE:WFC), said on Thursday.

In addition to basics of risk management, he covers techniques of hedging, the role of information systems in exposure management, and presents select case studies of foreign exchange risk exposure management.

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